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How much revenue should spenders company allocate

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Question - Spenders Company is an experienced home appliance dealer. Spenders Company also offers a number of services together with the home appliances that it sells (installation and maintenance). Spenders Company sells dishwashers on a standalone basis, it also sells installation and maintenance service for the dishwashers.

Pricing for dishwashers is as follows:

Dishwasher only $1,600

Dishwasher with installation service 1,700

Dishwasher with maintenance services $1,950

Dishwasher with installation and maintenance services 2,900

In cases where maintenance services are provided, the maintenance service is separately priced within the arrangement at $350. Dishwashers are sold subject to a general right of return. If a customer purchases a dishwasher with installation and/or maintenance services, in the event Spenders Company does not complete the service satisfactorily, the customer is only entitled to a refund of the portion of the fee that exceeds $1,600. On January 1, 2012, Spenders Company sells 100 dishwashers to Condo Complex, Inc. a developer of high-rise condos. The dishwashers are installed and Condo Complex, Inc. purchases the dishwashers with the installation and maintenance services. The total price for the 100 dishwashers is $190,000. How much revenue should Spenders Company allocate to the maintenance services?

a. $-0-

b. $33,250

c. $35,000

d. $30,000

Reference no: EM132547758

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